The Next Silicon Valley Won't Do Silicon

One of my heroes is Pike Powers, a politician-turned-consultant who helped build Austin, Texas, from a sleepy state capital into one of the world’s premier technology clusters. In an essay for the Federal Reserve Bank of Kansas City, Powers explains how they did it. The key to Austin’s success, he says, was the collaboration between local government, big business and the University of Texas.

These entities agreed that economic development was the ultimate goal, and they drew up long-term strategic plans to lure businesses to the city. The city spent money on schools, roads and water rights. The university built startup incubators and encouraged spin-off companies. Local business organizations campaigned to lure companies to the area. But there was a focus not just on attracting businesses, but on human capital as well -- Austin worked hard to create the kind of city where so-called creative-class types would want to live, which in turn made it more attractive for companies to move there.